NCPA December 7, 2023

ponziToday in 2008, Bernie Madoff was arrested and charged with securities fraud in a $50 billion Ponzi scheme — a type of con that lures new investors whose money is used to pay profits to longtime investors. But, who was Ponzi? Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi — or Charles, as he was known in the U.S. and Canada, and a native of Lugo, Italy — was a swindler and con-man who told clients he could secure them a 50 percent profit within six weeks or a 100 percent profit within 12 weeks in a complicated arbitrage scheme involving postal reply coupons. (Pictured, an International Reply Coupon from 1959, which can be purchased for a set price in one country and redeemed in other countries with no expiration.) The genius of Ponzi’s scheme is that the schemer may keep up the impression of guaranteed profit as long as some investors — specifically the ones who have been participating the longest — see some of the money. The risk of the scheme for the schemer is if new and old investors lose faith in their investments (or the economy generally) and demand their money back simultaneously, which, of course, is a request the Ponzi at the center of it can’t possibly satisfy. Madoff’s scam was spectacularly huge and the losses incurred by his duped investors were, in many cases, devastating. Poor Ponzi (pictured) can’t be blamed for that misery, but his name lives on as the face of the scam that is easy to perpetuate and almost impossible for its victims to recover from.